Question

LeBron James incorporates a new business, Phi Slamma Jamma, Inc., on December 1, 20xx. The company uses the accrual method of accounting. In addition to the accounts you see below, the company uses Consulting Revenues #400, Sales #401, Gains #405 and the Salaries Expense #500 accounts. Journalize each transaction. P2. Prepare an adjusted trial balance as of December 31, 20XX. You will need to set up ledgers (or t-accounts) for each account used.   

Cash	#100	Unearned Revenue	#200
Accts Receivable	#105	Accounts Payable	#201
Allow 4Bad Debts	#106	Salaries Payable	#202
Supplies	#111	Interest Payable	#203
Prepaid Rent	#112	Notes Payable	#210
Equipment	#150	Common Stock	#300
Accum. Deprec.	#151	PIC, XOP – Common	#301
		Retained Earnings	#320

Dec 1	LeBron invests $1,000,000 cash into Phi Slamma Jamma, Inc. for 100,000 shares of common stock that has a $1 par value and the right to vote. LeBron elects himself to the board of directors and hires Kyrie Irving to be his CEO.
Dec 1	PSJ, Inc. pays $96,000 to rent an office in downtown Cleveland for 12 months.
Dec 1	Acquired $50,000 of office computers by making a $20,000 cash down payment and will pay the balance in nine months.
Dec 1	Purchases inventory from Akron Supply Co. for $200,000 on account. The shipping terms were FOB Destination point. The credit terms are 1/15, N/30.
Dec 1	PSJ, Inc. signs a contract to provide consulting services to clients ratably over the next eight months. PSJ, Inc. collects $160,000 cash from the clients.
Dec 10	PSJ, Inc. sells $300,000 of merchandise to clients on account using the credit terms 2/30, N/90. The cost of the goods sold was $100,000.
Dec 15	Issued check #1 to Kyrie Irving for $50,000 and promised to pay him $30,000 in three months. Withhold $9,600 from Mr. Irving’s earning for federal income taxes and .062 and .0145 for Social Security and Medicare taxes.
Dec 20	Issued check #2 to Akron Supply Co. for $175,000.
Dec 31	The board of directors declared a $.05 per share dividend to be paid on Jan 15, 2017.
Dec 31	PSJ, Inc. repurchased 10,000 shares of LeBron’s stock for $20 per share.
Dec 31	The computers should last three years and have a salvage value of $0. PSJ, Inc. uses the straight-line method. Some of the prepaid rent has expired. Some of the service revenue work has been completed. Two percent of the inventory sold is expected to be returned. Four percent of the accounts receivable are estimated to be uncollectible.

Answer 1

General Journal- P.S.J. Inc.
Date	Account Title	Debit	Credit
20xx		$	$
Dec. 1	Cash	1000,000
	Common Stock		100,000
	Paid in Capital, n excess of par		900,000
	Issue of 100,000 CS, par vale $1
Dec. 1	Prepaid Rent	96,000
	Cash		96,000
	Rent paid in advance to P.S.J, Inc.
Dec. 1	Equipment	50,000
	Cash		20,000
	Note Payable		30,000
	Bought office computer
Dec. 1	Merchandising Inventory	200,000
	Account Payable		200,000
	Bought Inventory on credit
Dec. 1	Cash	160,000
	Unearned Revenue		160,000
	collected cash from client in advance
Dec. 10	Account Receivable	3,00,000
	Sales		3,00,000
	Sold inventory on account
Dec. 10	Cost of Goods Sold	100,000
	Merchandising Inventory		100,000
	COGS recorded
Dec. 15	Salaries Expense	80,000
	Cash		50,000
	Salaries Payable		30,000
	Salaries Expense accrued
Dec. 20	Account Payable	175,000
	Cash		175,000
	Paid to Akon Supply Company
Dec. 31	Dividend	5,000
	Dividend Payable		5,000
	Div on 100,000 share @ 0.05/CS
Dec. 31	Treasury Stock	200,000
	Cash		200,000
	Repurchased 10,000 CS @20 each
Dec. 31	Depreciation Expense	1,389
	Accumulated Depreciation		1,389
	Being Dep. expense recorded
Dec. 31	Rent Expense	8,000
	Prepaid Rent		8,000
	One month rent expired recorded
Dec. 31	Unearned Revenue	20,000
	Service Revenue		20,000
	service performed in respect of UR
Dec. 31	Sales Return	6,000
	Account Receivable		6,000
	2 % of sales returned
	Merchandising Inventory	2,000
	Cost of goods sold		2,000
Dec. 31	Bad Debts Expense	11,760
	Allowance for Bad Debts		11,760
	4% of AR-296,000 provided for D

Adjusted Trial Balance
P.S.J, Inc.
Dec. 31 20xx
Account Title	Debit	Credit
Cash	619,000
Prepaid Rent	88,000
Equipment	50,000
Accumulated Depreciation		1,389
Account Receivable	294,000
Inventory	102,000
Treasury Stock	200,000
Note Payable		30,000
Unearned Revenue		140,000
Service Revenue		20,000
Sales		3,00,000
Sales Return	6,000
Cost of Goods Sold	98,000
Retained Earning		0
Allowance for Bad Debts		11,760
Bad Debts Expense	11,760
Salaries expense	80,000
Depreciation Expense	1,389
Rent Expense	8,000
Dividend	5,000
Dividend Payable		5,000
Account Payable		25,000
Salaries Payable		30,000
Common Stock		100,000
Paid in Capital in excess of Par-CS		900,000
Total	1,563,149	1,563,149